Tips On Saving Money

Saving Money Fast

If you have a job loss, major car repair, medical emergency, or need to pay for a major repair on your home, knowing you have money saved to fall back on is a good position for you to be in.

When it comes to saving, money tips that work are what count at the end of the day.

Below, you'll find our strategies for saving money fast that we've used for years and will help you to increase your cash savings and alleviate your financial worries.

Tips On Saving Money

Tips On Saving Money - The Emergency Fund

Now, they're in trouble financially. They're unable to pay their bills, including their car and home payment. They're actually borrowing off of their credit cards to help make bill payments, which is a recipe for disaster because they're falling further into debt.

So, it's a very good idea to set up an emergency fund. The rule of thumb is for you to have between 3 to 6 months of your living expenses set aside for emergencies. However, we recommend you strive towards putting closer to six months worth of savings aside, especially in the event of a bad economy.

The most common reason for having your emergency fund set up is because of an unexpected job loss. If you or your significant other loses a job, the bills are still there and it can take a few months to find another job. It's just a good idea for you to plan ahead for an unexpected event that can put a financial drain on you.

If you don't have an emergency fund, don't worry. Getting started is what's important. To begin, we recommend you set up a new savings account just for emergencies with your bank. Then you should regularly (bi-weekly, monthly, etc.) make a deposit into this account.

You don't have to climb the mountain all at once; just take one step at a time. So, start your emergency fund with a small amount, say $50 a month. If your budget allows for more, than by all means put in more than $50. What's important is you start to consistently add to your emergency fund and make it a habit.

If you're thinking, I never seem to have any money left over for savings; trust us you do. Pay yourself first by putting the cash into your emergency savings account. You'll find that by paying yourself first, you'll get the bills paid.

You'll also find that making a budget will help you eliminate unnecessary spending, freeing up more of your money for savings.

Tips On Saving Money - Savings Options

• Tips On Saving Money - Savings Accounts.

  More than likely, you've got a savings account set up with your local bank or credit union that is linked to your checking account. This is a convenient way to save because the funds are there for you when needed.

  Having the savings account is a necessary first step to save money for an emergency fund. It's also important should you need quick access to your cash; but it's not going to have your money working for you because the interest rate earned on these accounts is very low.

  These days, unless you have a very high cash balance in your savings account, you're not going to earn even 1%. So, by keeping all your cash in a savings account earning maybe .50%, you're not even keeping up with inflation and losing your purchasing power as a result.

  So, the biggest advantages of having a savings account is its convenience and liquidity. This means you can access your money quickly when needed. If you need cash, you can run to the bank for a quick withdrawal or use the ATM.

• Tips On Saving Money - Money Markets

  Another money saving source are money markets. Banks offer money market accounts which we feel don't do much to help you because, like savings accounts, the interest rate earned is low. Also, you have restrictions on how many withdrawals you can make each month.

  Money market mutual funds, however, are a different story. This is basically a mutual fund offered by investment companies such as big players like Fidelity and Vanguard. These funds invest in a pool of short-term investments and pay out an attractive interest rate.

  We've invested in these funds for several years. However, this savings option depends on how risk averse you are.

  Unlike a bank savings, money market account or CD, money market mutual funds are not FDIC insured. FDIC insurance protects you're cash balances up to $250,000 in the event that a bank or financial institution goes under (ie: files bankruptcy).

• Tips On Saving Money - CD's

  Certificates of deposit (CD's) are another option for parking your savings. Basically, a CD is a time deposit, which means the money you put into a CD should remain there for a specific amount of time before you can withdraw it. A CD's maturity can range from days to 3 months, 6 months, 1 year, or even up to 5 years.

  We like CD's because you can earn a decent interest rate, they're usually FDIC insured (verify FDIC insurance with your bank) and you can choose how long to park your money in the CD whether it be 3 months, 6 months, 1 year, etc.

  We prefer the shorter terms CD's because it enables us access to our funds quicker than a longer term CD. Also, the interest rate earned is not substantially higher on a long versus short term CD.

  Another benefit of the CD is in an emergency you can still withdraw your money prior to its maturity. You would lose some or all the interest you would have earned on it had you held onto it until maturity. However, you will recover the money (the principal) you put into the CD.

Other Saving Money Tips

• It's worth repeating because it's a critical step towards saving money. Budget, budget, budget. Please see smart ways to save money.


• Take advantage of free checking and savings accounts.
• Avoid bank fees. Ask the bank if there are any fees associated with your savings account or CD. Some savings accounts have no minimum balance fees while other do. We generally stay away from accounts with fees unless it's a very small minimum balance requirement.
• Know how much interest you're actually earning on your savings. There is a difference between APR (annual percentage rate) and APY (annual percentage yield).

  The difference is the compounding; which is how often interest builds up against your savings balance. APR doesn't take compounding into consideration, while APY does.

  So, the true interest rate you'll earn will be the APY, which is what you want to base your savings decision on. So, you should always compare APY to APY.

Tips On Saving Money - Summary

We're confident you'll benefit from these tips as we have.